10-K Watch: RealNetwork’s Call/Put Rights With Rhapsody America JV With MTVN
By Rafat Ali - Sun 02 Mar 2008 02:55 PM PST
RealNetworks (NSDQ: RNWK) filed its 10-K annual report last week with SEC, and some numbers on the layoffs it did in relation to its WiderThan acquisitions, and some layoffs in its music division.
During Q407, it recorded a restructuring charge of $3.7 million, primarily related to severance. These charges were “a result of workforce reductions and other realized synergies among our recent acquisitions,” it said.
On the formation of its MTV joint venture music company Rhapsody America, it adds some additional details on the deal structure (more than the ones we reported here first):
-- “We have a right to purchase from MTVN (NYSE: VIA), and MTVN has a right to require us to purchase, MTVN’s membership interest in Rhapsody America. These call and put rights are exercisable upon the occurrence of certain events and during certain periods in each of 2012, 2013 and 2014 and every two years thereafter and may be settled, in part, through the issuance of shares of our capital stock, subject to specified limitations...these right are not exercisable any time prior to January 1, 2011.
-- If MTVN exercises its put right, RealNetworks has the right to pay a portion of the purchase price for MTVN’s interest in cash and shares of RealNetworks capital stock, subject to certain maximum amounts with the balance (if any) paid with a note. If RealNetworks exercises its call right, MTVN has the right to demand payment of part of the purchase price for its membership interest in shares of RealNetworks’ capital stock. If a portion of the purchase price for MTVN’s interest is payable in shares of RealNetworks’ capital stock, such shares could consist of our common stock representing up to 15% of the outstanding shares of RealNetworks’ common stock immediately prior to the transaction, and shares of our non-voting stock representing up to an additional 4.9% of the outstanding shares of RealNetworks’ common stock immediately prior to the transaction representing a maximum of 19.9% of RealNetworks’ capital stock. If RealNetworks pays a portion of the purchase price for MTVN’s membership interest in shares of RealNetworks’ common stock and non-voting stock, RealNetworks other shareholders’ voting and economic interests in RealNetworks could be diluted and MTVN will become one of RealNetworks’ significant shareholders.
Posted in: Companies, RNWK, Viacom, MTVN, Entertainment, Music
Tags: rhapsody america
